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Lapse Supported Life Insurance Policies


Definition of "Lapse supported life insurance policies"

Michael Valerio
  HomeSmart Professionals

Policies that have their future cash values closely correlated with a high lapse ratio of the insurance company's book of business. In theory, gains resulting from these lapses will result in a greater surplus account, thereby building the future cash values of these policies. In essence, the policy is specifically designed so that if it is surrendered, its surrender value would be less than its asset share value.



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